Demand all but disappears

If You Thought the 18% drop in paper demand in the fourth quarter of 2008 was bad, “the 26% decline in January beat all records,” says John Maine, vice president of forest industry research group RISI. “Never has the entire printing and writing paper market dropped by such an extensive amount.” The largest monthly drop in demand in the past 32 years had been 15%.

Companies weren’t interested in buying paper of any sort, Maine says, “and demand for grades that were previously holding up well also plummeted in January.” Demand for high-gloss supercalendered, for example, fell 35%.

This softness in demand provides ammunition to buyers who want to negotiate price, Maine says. And paper prices will continue to fall in the second and possibly third quarter of 2009, “despite the fact that production cost declines have now abated.”

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